of American accounting the Journal of Accountancy
has recorded so far has seen the growth of
regulations, organizations and technological
In contrast, during the previous 100
years, accounting and auditing practices developed
in the near absence of authoritative requirements.
The federal government in particular had relatively
few programs or laws requiring accountants’
involvement, there were very few professional
accounting organizations, and most new technology
affected areas outside accounting. As the timeline
demonstrates, the years from 1905 to 2005 were
filled with new activity in these areas.
AICPA has had different names over the past century.
For simplicity’s sake, it is here often called “the
Stephanie Moussalli, PhD, is an assistant
professor of accounting at Nicholls State
University in Thibodaux, La.
The Journal of Accountancy’ s
first issue appears, based on an earlier journal of
the Illinois Society of CPAs, The Auditor.
The Interstate Commerce Commission
(created in 1887) seeks to set up a uniform system
of accounting for the railroads.
The U.S. Census Bureau calls a
conference on uniform municipal accounting that
adopts a tentative schedule of standard accounts.
A committee of the American Association
of Public Accountants (the AAPA—a predecessor of the
AICPA) is appointed to help the federal Keep
Commission introduce business methods into
government, an important Progressive Era goal. This
is an early instance of the federal government’s use
of professional accountants as official advisers.
The AAPA forms a committee to create
ethics standards for members.
A federal excise tax is levied on
Charles Kettering invents an accounting
machine for the National Cash Register Co.
The 16th Amendment to the U.S.
Constitution is ratified, permitting a federal
The Federal Reserve Act passes,
establishing the Federal Reserve Board.
The Clayton Antitrust Act passes,
creating the Federal Trade Commission. The FTC puts
increased government focus on private sector audits
and reporting and promotes official standards and
The American Association of University
Instructors in Accounting is founded (and renamed
the American Accounting Association in 1935).
The AAPA changes its name to the
American Institute of Accountants (AIA). In
reorganizing, the group rejects the move toward
federal licensing of accountants.
“Uniform Accounting,” a project
spearheaded by the AIA and published in the
Federal Reserve Bulletin , is the first
guidance promulgated by any professional accounting
The AIA’s governing council approves
eight rules of professional conduct and a model CPA
The AIA offers state accountancy boards
a written examination for use in testing entrants to
The National Association of Cost
Accountants, the predecessor of today’s Institute of
Management Accountants (IMA), is formed.
The AIA, under some pressure from the
Treasury Department, bans contingent fees and most
John Cromwell, a New Hampshire
accountant, becomes the first black CPA.
With the passage of CPA legislation in
New Mexico, all states in the union at that time now
have such laws.
The American Society of Certified
Public Accountants is founded. The ASCPA tries to
stop the sale of CPA credentials and is oriented to
state-level authority and multiple accounting
services, while the AIA focuses on national
authority and has an East Coast and auditing
orientation. The two organizations ultimately merge
The federal Budget and Accounting Act
passes, creating the General Accounting Office
(today called the Government Accountability Office)
and the Office of Management and Budget.
Beta Alpha Psi, the student accounting
honor society, is formed.
The federal Board of Tax Appeals is
created as an entity independent of the Treasury
IBM introduces the 80-column,
machine-readable punched card that will be in
standard use for the next half-century, handling a
wide range of accounting operations.
The stock market crashes. The Great
Depression begins. Over the next four years, U.S.
industrial production plunges by 50%, the money
stock drops by 28% and the number of banks falls by
The Ultramares case defines
accountants’ liability in cases of negligence and
fraud. It opens the door for shareholder lawsuits by
upsetting the widely accepted idea that accountants
could be held liable for negligence only by those
with whom they had a contractual relationship.
Ivar Kreuger, the “Match King”—an
influential proponent of financial secrecy for
corporations—dies and his pyramid stock swindle is
uncovered. His securities were the most widely held
in the world; his company’s bankruptcy becomes the
biggest to date.
The New York Stock Exchange requires
its listed companies to have audits.
The American Woman’s Society of CPAs is
founded. A survey finds there are 105 female CPAs.
The New Deal creates extensive new
banking regulations and federal programs requiring
The Securities Act of 1933 and the
Securities and Exchange Act of 1934 pass. The
Securities and Exchange Commission is created to
regulate financial markets. Carman Blough is
appointed SEC chief accountant. Leading accountants
successfully oppose proposals for the government to
oversee business directly or conduct audits of
public companies. Instead, the new laws require
independent audits but also limit accountants’
control over accounting standards.
The New York Stock Exchange requests
the AIA’s advice on financial statement formats.
The National Committee on Municipal
Accounting is organized to develop integrated
accounting and reporting standards for state and
The phrase “generally accepted
accounting principles” is first used in an AIA
report, “Examination of Financial Statements.”
The Institute Committee on Accounting
Procedure (CAP) effectively becomes the first U.S.
accounting standard-setting body for the private
The SEC’s highly publicized
investigation of the McKesson & Robbins fraud
discovers the auditors had not confirmed accounts
receivable or verified the existence of inventory.
In response, the AIA sets up a standing committee to
issue pronouncements on generally accepted auditing
The AIA’s Committee on Accounting
Procedure publishes the first Accounting Research
Iowa professor John Atanasoff designs
the first working model of an electronic digital
computer, using vacuum tubes.
The American Accounting Association
publishes William Paton and A. C. Littleton’s
Introduction to Corporate Accounting
Standards, which defends and establishes
historical cost valuation and the matching
principles in accounting literature.
The Institute of Internal Auditors is
IBM produces more than 5,000 accounting
machines used in Washington and overseas for
The United States begins income tax
withholding. IBM creates the W-2 form and the
equipment to track withheld taxes.
Wartime wage and price controls are
imposed, requiring extensive cost calculations.
An excess profits tax with a marginal
rate of 93% is levied. The individual income tax
changes from a “class tax” to a “mass tax.”
The accounting profession thrives. In
1940 there is one professional accountant for every
406 U.S. workers; by 1950 there is one for every 283
The GAO establishes the Corporate
Audits Division to oversee government audits and
names CPA T. Coleman Andrews as its first head.
The National Committee on Municipal
Accounting is reactivated, is renamed the National
Committee on Governmental Accounting, and publishes
18 pronouncements on state and local accounting over
the next 20 years.
The first fully electronic
stored-program computers—true computers in today’s
terms—are set up in England. Soon afterwards,
America’s first commercial computer, UNIVAC 1, is
delivered to the Census Bureau. Very large
corporations also use UNIVAC 1, which can perform
2,000 calculations per second.
The Accounting Hall of Fame is
established at The Ohio State University.
The CAP publishes the first
codification of GAAP in Accounting Research Bulletin
T. Coleman Andrews becomes the first
CPA to head the Internal Revenue Service.
Arthur Andersen designs and installs a
computer-controlled payroll system for General
Electric, one of the first business systems
applications of a computer.
GE creates ERMA, Electronic Recording
Machine Accounting, for the Bank of America, a major
accounting improvement for the banking world.
The Commission on Standards of
Education and Experience for CPAs issues the Perry
Report, which recommends a five-year professional
accounting degree as qualification to become a CPA.
The American Institute of Accountants
renames itself the American Institute of Certified
The Accounting Principles Board
replaces the CAP as the Institute’s authoritative
financial accounting body.
The Special Coordinating Committee to
Study the Report of the AICPA Commission on
Standards of Education and Experience for CPAs
recommends a postbaccalaureate (five-year) education
requirement for the CPA certificate. This
recommendation is subsequently endorsed by the AICPA
APB Opinion no. 2 is issued to defer
the new investment tax credit’s effects on income
statements. Corporate managers, the Treasury
Department and many congressional representatives
overwhelmingly oppose it and, in 1964, the SEC
declares companies need not implement it.
Congress passes a law allowing CPAs to
represent clients before the IRS.
Congress creates Medicare and many
other Great Society programs involving very complex
The accounting profession continues to
thrive; there is one professional accountant for
every 294 American workers in 1960, but by 1970,
there is one for every 197 workers.
The American Accounting Association
(AAA) recommends accounting professors have
The AAA issues A Statement of Basic
Accounting Theory (ASOBAT) , which proposes
evaluating accounting information based on its
relevance, verifiability, freedom from bias and
measurability, and says such information should be
oriented to the user.
The AICPA and the Carnegie Corp. issue
Horizons for a Profession, which
recommends a common body of knowledge for accounting
students and a five-year education requirement.
The Department of Defense creates
ARPANET, eventually linking computers across the
country and leading ultimately to the creation of
The Tax Reform Act of 1968 changes the
focus of the income tax from economic incentives to
The National Committee on Governmental
Accounting publishes authoritative GAAP for state
and local governments: GAAFR (governmental
accounting, auditing and financial reporting).
The National Association of Black
Accountants is organized in New York City.
The Penn Central Railroad experiences
the largest bankruptcy to date.
The AICPA issues Statement of Auditing
Procedures no. 49, requiring auditors to report on
The Accounting Principles Board issues
Opinion nos. 16 and 17 on accounting for business
combinations and goodwill. These prove so
controversial that three of the Big Eight firms
notify the AICPA they have lost confidence in the
The American Accounting Association
calls for an alternative to the Accounting
The AICPA endorses its Wheat
committee’s (Report of the Study Group on the
Establishment of Accounting Principles) call
for an alternative to the APB.
The GAO publishes Government
Auditing Standards (the “Yellow Book”).
The AICPA rescinds its ban on
The Financial Accounting Standards
Board replaces the APB.
The International Accounting Standards
Committee is formed. (It is renamed the
International Accounting Standards Board in 2001).
The AICPA publishes the Trueblood
committee report, Objectives of Financial
Statements, which says providing corporate
information to outside users is the primary purpose
of financial reports.
Equity Funding collapses and its
massive computer-based fraud is discovered. As a
result, auditors may no longer “audit around the
AICPA appoints the Commission on
Auditors’ Responsibilities (the Cohen commission) in
response to the Equity Funding and other scandals.
The Cohen report concludes, in 1978, that there is
an “expectations gap” between what auditors do and
what the public expects of them.
The first widely used PCs appear: the
MITS Altair 8800, followed by the Apple and Apple
Congress’s Moss and Metcalf committees
conclude their wide-ranging investigation of
accounting and auditing. They recommend increased
federal regulation of the profession and a
government takeover of private sector standard
The Foreign Corrupt Practices Act
forbids American companies to bribe any officials of
foreign governments and requires that corporations
keep extensive records of transactions for
The AICPA creates an SEC Practice
Section and a Private Companies Practice Section,
both of which implement self-regulation, including
peer review and quality control. Soon, the Public
Oversight Board is set up to oversee the SEC
The International Federation of
Accountants is formed.
The SEC’s Accounting Series Release 250
compels companies to disclose the ratio of nonaudit
to audit fees. The next year, ASR 264 attempts to
restrain the provision of nonaudit services to audit
clients. Both are later rescinded.
The Federal Trade Commission and the
Department of Justice ask the AICPA to revise its
Code of Conduct by ending its ban on direct
uninvited solicitation, arguing the ban is a
restraint on trade.
SSARS no. 1, the first statement on
standards for accounting and review services,
defines reviews and compilations and prescribes the
form of reports to be issued.
VisiCalc, the first electronic
spreadsheet software, is introduced.
Lotus 1-2-3 revolutionizes accounting
for small and midsize businesses.
The Single Audit Act requires a
comprehensive single audit for state and local
governments receiving federal money.
The AICPA and the National Association
of State Boards of Accountancy publish the first
joint model bill to regulate the practice of public
accounting, later known as the Uniform Accountancy
The Governmental Accounting Standards
Board replaces the National Council on Governmental
After the gigantic collapse of the
savings and loan industry, Rep. John Dingell
(D.–Mich.) holds a series of hearings investigating
whether the government should take over the issuance
of accounting standards and oversight of auditors.
The Tax Reform Act of 1986, one of the
most far-reaching reforms of the U.S. tax system
since the inception of the income tax, is signed
The Anderson committee issues its
report, Restructuring Professional Standards to
Achieve Professional Excellence in a Changing
Environment, in response to concerns over the
profession’s ability to serve the public interest
and retain public confidence.
The American Accounting Association
publishes the Bedford Report, which is critical of
The AICPA celebrates its 100th
anniversary. The Journal of Accountancy
issues a special AICPA centennial issue in May.
As part of the Plan to Restructure
Professional Standards, Institute members vote to
amend the bylaws to require, among other changes,
that all members who audit publicly traded companies
work for a firm that is a member of the SEC Practice
The National Commission on Fraudulent
Financial Reporting (popularly known as the Treadway
commission) reports on how fraudulent financial
management can be reduced and how auditors can
reduce the “expectations gap” between themselves and
The AICPA introduces the Personal
Financial Specialist credential.
The AICPA approves the requirement of
150 hours of education for new members after 2000.
Members approve the AICPA bylaw that
makes the existing voluntary peer review program
The Federal Accounting Standards
Advisory Board is created. In 1999 the AICPA council
will recognize the FASAB as a body entitled to
establish GAAP standards for federal government
The World Wide Web is launched.
The AICPA Special Committee on
Financial Reporting (the Jenkins committee) proposes
a business reporting model.
The Institute launches the CPA Vision
Project, a grassroots initiative to define the
future of the profession.
For the first time, more AICPA members
are employed in industry than in public accounting
The AICPA offers the first exam for its
Accredited in Business Valuation credential.
The AICPA introduces the Certified
Information Technology Professional designation.
Enron restates its earnings back to
1997 and files for bankruptcy protection. The firm
of Arthur Andersen will collapse due to its
association with Enron. A verdict of obstruction of
justice against the firm is overturned in 2005 by
the U.S. Supreme Court.
WorldCom’s accounting fraud is
discovered, and the company files for bankruptcy
The Sarbanes-Oxley Act is passed. Among
other changes, it creates the Public Company
Accounting Oversight Board to set public company
The PCAOB issues its first auditing
standards for public companies.
A new computerized Uniform CPA
Examination, focused more on research skills and
problem solving, replaces the paper-and-pencil
FASB amends Statement no. 123 on
compensatory stock options to eliminate alternatives
to expensing the options and to bring American rules
closer to international accounting standards.
The Journal of Accountancy
begins its second century. What will it record
about the profession in the next 100 years?